NEW HORIZON EDUCATIONAL AND Vs. FEDERAL BANK LIMITED

JUDGEMENT

(1.) The petitioner in the subject petition seeks a declaration that e-auction held by respondents 1 to 3 declaring sale of schedule property to be illegal and void and has sought for a further direction directing respondents 1 to 3 to conduct a fresh auction of sale. Though the matter was listed in orders, the matter was taken up for its final disposal with consent of parties.

(2.) Brief facts that lead the petitioner to this Court in the subject petition, as borne out from the pleadings, are as follows:- Respondents 5 to 8 were borrowers from respondents 1 and 2 Banks. The loan becoming sticky, proceedings were instituted under the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (' SARFAESI Act ' for short). The initiation of proceedings under the SARFAESI Act led the 1st respondent/Federal Bank Limited to conduct an e-auction of the property seeking to sell the property to redeem its mortgage and clearance of dues which according to the Bank at that point in time was Rs.51.00 crores. The issue in the lis is not with regard to the amount borrowed and its validity or otherwise, as the borrowers are not before the Court. The Federal Bank on the loan becoming a non-performing asset notifies a date 28/2/2023 for conduct of e- auction. Certain nuances of e-auction were also made known to the participants in the said auction. The auction did take place on 28/2/2023 and the petitioner and the 9th respondent are the participants in the said e-auction. The 9th respondent was declared to be the successful bidder. The successful bidder was not made a party to these proceedings. The 9th respondent then files an impleading application which comes to be allowed and, therefore, he is a party to these proceedings. The issue is between the petitioner, the Federal Bank Limited and the 9th respondent, now the successful bidder and they are the three main protagonists in the issue. The challenge is to the manner in which e-auction is conducted by the 1st respondent/Bank and in that light the petitioner has sought the prayer to declare e-auction conducted to be null and void.

(3.) Heard Sri Udaya Holla, learned senior counsel appearing for the petitioner; Sri B.R.Viswanath, learned counsel appearing for respondent No.1; Sri Francis Xavier, learned counsel appearing for respondent No.2; Sri Sateesh S.Kudtarkar, learned counsel appearing for respondents 5 and 6 and Sri Ashok Haranahalli, learned senior counsel appearing for respondent No.9.